Rental Property Modification

This is a rental property modification. Ocwen was the servicer, and the investor was Washington Mutual and now Chase.

The owner quit paying for 20 months, and the balance rose to $254,000.

The interest rate was already under 3.0%, because this was an adjustable rate loan. The payment was already low, around $1,156 plus $269.93 for taxes and insurance.

The end result was an in house modification that lowered the payment to $944.17 plus taxes and insurance. This payment and interest rate is based on a 398 month amortization.

The best part of the modification is that the rate is fixed at 2.54% for six years until 2019, when the balance will be $222,000. Then the rate will go up to 4.5% and continue at that level for 18 more years, when the full balance will be due. Although the rate will go up to 4.5%, the payment will stay at $944.17 plus taxes and insurance. There will be a balloon payment payoff after another 18 years in 2037, at which time the balance will be around $184,000.

There was no principal reduction, but the property is probably worth less than $254,000.

Rental property modifications are much more complex than owner occupied modifications. We have now done a lot of them.